ENERGY INTELLIGENCE – With Iraqi oil production ahead of schedule # at more than 2 million barrels per day # a major challenge for the country’s oil industry is now to produce enough kerosene to build stocks ahead of winter heating demand, and to get product pipelines up and transporting liquefied petroleum gas, diesel, and kerosene around the country, says a US oil official with the Baghdad-based Coalition Provisional Authority (CPA).
The mission over the next few months will be to restore the reliability of oil production and to produce and import products, outgoing Deputy Senior Oil Adviser Gary Vogler said late Monday at the annual meeting of the American Petroleum Institute in New Orleans. Iraq has been producing over 2 million b/d and, since mid-September, just over 1 million b/d has been exported from the southern port of Mina al-Bakr, Vogler said (EIB Oct.16).
“We’ve made amazing progress” in getting production going, Vogler said, particularly given the severe damage caused by looting at oil facilities. “The press has not exaggerated the amount of looting done in the south,” he said.
Most of the Iraqi refineries have been relatively free of looting, Vogler said. The refineries # Daura near Baghdad, Baiji in the north, Basrah in the south, as well as 10 or so smaller refineries with capacity of some 10,000 b/d each # are back in operation. The Baiji refinery is providing some 60% of the country’s product needs, and is estimated to process more than 200,000 b/d. Despite the increase in products output, Iraq still needs to import most main oil products.
Vogler, an ex-Exxon Mobil executive who joined the team of former Iraqi administrator Jay Gardner in January, left Iraq around Oct. 1 after a six-month stay. Gardner was the predecessor of the current administrator, Paul Bremer.
The CPA oil team # which never did become the executive committee that runs Iraq’s oil industry, as the Pentagon had in mind # has seen major personnel changes. Vogler is leaving to become an admissions officer with the US Military Academy in West Point, although he continues to plan Iraq’s oil future with former ConocoPhillips official Robert McKee, the senior US adviser to the Iraqi Oil Ministry (EIB Sep.22). McKee, who retired in April as ConocoPhillips’ executive vice president of exploration and production, has replaced former Shell Oil official Philip Carroll, who has returned to private life (EIB Jul.31). The UK has appointed former BP executive Terry Adams as its oil adviser.
Vogler could not say when oil exports from Iraq’s fields in the sabotage-plagued northern region would resume. Up to 7,000 Iraqi guards are being trained as an oil security force under the authority of the Task Force Shield, a structure set up a month ago in an effort by the CPA to hand over security of the country’s oil infrastructure to Iraqis.
A major task of the new guards will be to prevent the Iraqi export pipeline to the Turkish Mediterranean port of Ceyhan from being blown up. This pipeline was damage-free as of Monday night. However, recent tests revealed some technical problems that are preventing oil from flowing north, Thomas Crum said at the meeting on Monday. Crum is the Mideast chief operating officer of Kellogg Brown & Root (KBR), a Halliburton subsidiary in charge of rebuilding parts of the Iraqi oil industry.
But Crum said he was more conservative in his estimates of current Iraqi oil output than his client, the CPA; he put output at 1.5 million-1.6 million b/d.
That volume seems to be in line with recent estimates that put Iraq’s output in the north at 400,000 b/d, of which some 200,000 b/d were reinjected, and at about 1.2 million b/d in the south.
KBR is the main logistics supplier in Iraq. It provides housing, food, and other services to the CPA and to the 140,000 US troops in Iraq. KBR also takes care of all major truck hauling. The company has up to 600 trucks on the road daily to import everything Iraq needs, from food to oil products, from neighbors Jordan, Turkey, and Kuwait.
Both Vogler and Crum are upbeat about the security and rebuilding progress made in Iraq. But military and civil officials cautioned recently that advancements and goodwill built up in the region are in danger of being lost. Funding is drying up and more decisions are being made centrally in Baghdad, now that the CPA is beefing up the power of the new ministries.